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OFAC sanctions former Haitian politician
On April 5, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions, pursuant to Executive Order 13818, against the former President of the Haitian Chamber of Deputies “for his extensive involvement in corruption in Haiti.” OFAC explained that the designated individual “is a current or former government official, or a person acting for or on behalf of such an official, who is responsible for or complicit in, or has directly or indirectly engaged in, corruption, including the misappropriation of state assets, the expropriation of private assets for personal gain, corruption related to government contracts or the extraction of natural resources, or bribery.” The sanctions follow the designation of two Haitian politicians last December for their involvement in activities or transactions that have materially contributed to, or pose a significant risk of materially contributing to, the international proliferation of illicit drugs or their means of production. (Covered by InfoBytes here.)
As a result of the sanctions, all property and interests in property belonging to the sanctioned individual subject to U.S. jurisdiction are blocked and must be reported to OFAC. Additionally, “any entities that are owned, directly or indirectly, individually or in the aggregate, 50 percent or more by one or more blocked persons are also blocked.” U.S. persons are also generally prohibited from engaging in any dealings involving the property or interests in property of blocked or designated persons unless authorized by a general or specific license, or exempt. Financial institutions and persons that engage in certain transactions with the designated individual may themselves be exposed to sanctions or subject to enforcement.
OFAC sanctions politically connected Lebanese individuals
On April 4, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions, pursuant to Executive Order 13441, against two politically connected Lebanese brothers who engaged in corrupt practices that contributed to the undermining of Lebanon’s democratic process. As a result of the sanctions, “all property and interests in property of the individuals named above, and of any entities that are owned, directly or indirectly, 50 percent or more by them, individually, or with other blocked persons, that are in the United States or in the possession or control of U.S. persons, must be blocked and reported to OFAC.” U.S. persons are generally prohibited from engaging in any dealings involving the property or interests in property of blocked or designated persons.
Treasury recommends stronger DeFi supervision
On April 6, the U.S. Treasury Department published a report on illicit finance risks in the decentralized finance (DeFi) sector, building upon Treasury’s other risk assessments, and continuing the work outlined in Executive Order 14067, Ensuring Responsible Development of Digital Assets (covered by InfoBytes here).
Written by Treasury’s Office of Terrorist Financing and Financial Crimes, in consultation with numerous federal agencies, the Illicit Finance Risk Assessment of Decentralized Finance is the first report of its kind in the world. The report explained that, while there is no generally accepted definition of DeFi, the term has broadly referred to virtual asset protocols and services that allow for automated peer-to-peer transactions through the use of blockchain technology. Used by a host of illicit actors to transfer and launder funds, the report found that “the most significant current illicit finance risk in this domain is from DeFi services that are not compliant with existing AML/CFT [anti-money laundering and countering the financing of terrorism] obligations.” These obligations include establishing effective AML programs, assessing illicit finance risks, and reporting suspicious activity, the report said.
The report made several recommendations for strengthening AML/CFT supervision and regulation of DeFi services, such as “closing any identified gaps in the [Bank Secrecy Act (BSA)] to the extent that they allow certain DeFi services to fall outside the scope of the BSA’s definition of financial institutions.” The report also recommended, “when relevant,” the “enforcement of virtual asset activities, including DeFi services, to increase compliance by virtual asset firms with BSA obligations,” and suggested continued research and engagement with the private sector on this subject.
In addition, the report pointed to a lack of implementation of international AML/CFT standards by foreign countries, “which enables illicit actors to use DeFi services with impunity in jurisdictions that lack AML/CFT requirements,” and commented that “poor cybersecurity practices by DeFi services, which enable theft and fraud of consumer assets, also present risks for national security, consumers, and the virtual asset industry.” To address these concerns, the report recommended “stepping up engagements with foreign partners to push for stronger implementation of international AML/CFT standards and advocating for improved cybersecurity practices by virtual asset firms to mitigate these vulnerabilities.” The report seeks input from the public sector to inform next steps.
OFAC sanctions darknet marketplace for selling stolen data
On April 5, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions, pursuant to Executive Order (E.O.) 13694, as amended by E.O. 13757, against one of the world’s largest darknet marketplaces for its involvement in the theft and sale of device credentials and related sensitive information. According to OFAC, the marketplace accesses victims’ devices without authorization and sells the stolen data, including usernames and passwords, on the darknet. The action was taken in coordination with the DOJ and international partners from a dozen countries who are also taking action against market users across multiple jurisdictions and seizing associated website domains. The designation built upon previous actions taken against darknet marketplaces, including sanctions issued last year against the world’s most prominent darknet market. (Covered by InfoBytes here.) OFAC also referenced FinCEN’s 2019 Advisory on Illicit Activity Involving Convertible Virtual Currency, to warn “that darknet markets frequently include offers for the sale of illicit goods and services that use virtual currencies as a method of payment.” (Covered by InfoBytes here.) As a result of the sanctions, all property and interests in property belonging to the sanctioned entity in the U.S. must be blocked and reported to OFAC. OFAC noted that U.S. persons are prohibited from participating in transactions with sanctioned persons, and that “persons that engage in certain transactions with the entity designated today may themselves be exposed to sanctions.”
The DOJ stated in its press release that, along with its partners, it had “dismantled” the marketplace and “arrested many of its users around the world.” The DOJ explained that the marketplace “was also one also one of the most prolific initial access brokers [] in the cybercrime world,” and “attract[ed] criminals looking to easily infiltrate a victim’s computer system.” The marketplace sold access to ransomware actors looking to attack computer networks in the United States and globally, the DOJ said, adding that the marketplace also sold device “fingerprints” used to trick third-party websites into thinking the marketplace user was the actual account owner.
OFAC sanctions arms facilitator for attempted North Korea-Russia deals
On March 30, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions, pursuant to Executive Order 13551, against a Slovakian national for attempting to facilitate arms deals between Russia and the Democratic People’s Republic of Korea (DPRK) to aid Russia’s war against Ukraine. “Schemes like the arms deal pursued by this individual show that Putin is turning to suppliers of last resort like Iran and the DPRK,” Secretary of the Treasury Janet L. Yellen said. “We remain committed to degrading Russia’s military-industrial capabilities, as well as exposing and countering Russian attempts to evade sanctions and obtain military equipment from the DPRK or any other state that is prepared to support its war in Ukraine.”
As a result of the sanctions, all property and interests in property of the sanctioned individual that are in the United States or in the possession or control of U.S. persons must be blocked and reported to OFAC, as well as “any entities that are owned, directly or indirectly, 50 percent or more by one or more blocked persons.” Persons that engage in certain transactions with the designated individual may themselves be exposed to sanctions, and “any foreign financial institution that knowingly facilitates a significant transaction or provides significant financial services for the individual designated today could be subject to U.S. correspondent or payable-through account sanctions.”
OFAC sanctions individuals involved in Syria’s drug production and trafficking
On March 28, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) designated key individuals for supporting the regime of Syrian President Bashar al-Assad and the regime’s billion-dollar illicit drug production and trafficking enterprise. Taken in coordination with the UK, the designations, issued pursuant to Executive Orders 13572, 13582, and 13224, “also highlight the important role of Lebanese drug traffickers—some of whom maintain ties to Hizballah—in facilitating the export of Captagon[,]” the dangerous amphetamine at issue. As a result of the sanctions, all property and interests in property belonging to the sanctioned persons subject to U.S. jurisdiction are blocked and must be reported to OFAC. Additionally, “any entities that are owned, directly or indirectly, 50 percent or more by one or more blocked persons are also blocked.” U.S. persons are also generally prohibited from engaging in any dealings involving the property or interests in property of blocked or designated persons. Persons that engage in certain transactions with the designated individuals or entities may themselves be exposed to sanctions or subject to an enforcement action, OFAC warned.
OFAC sanctions Belarusian state-owned enterprises and government officials; amends Belarus Sanctions Regulations
On March 24, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions against Belarusian state-owned enterprises and government officials. In so doing, OFAC designated three entities and nine individuals, and identified one presidential aircraft as blocked property, pursuant to Executive Order 14038. The announcement noted that the designations build on previously issued sanctions taken against individuals and entities in Belarus in response to efforts by the Lukashenka regime to suppress democracy and support the Russian Federation’s war against Ukraine. “The authoritarian Lukashenka regime relies on state-owned enterprises and key officials to generate substantial revenue that enables oppressive acts against the Belarusian people,” Under Secretary of the Treasury for Terrorism and Financial Intelligence Brian Nelson said in the announcement. Concurrently, the State Department imposed visa restrictions on 14 additional individuals, “including regime officials involved in policies to threaten and intimidate the Belarusian people, for their involvement in undermining democracy under Presidential Proclamation 8015.”
As a result of the sanctions, all property and interests in property belonging to the sanctioned persons that are in the U.S. or in the possession or control of U.S. persons are blocked and must be reported to OFAC. Additionally, “any entities that are owned, directly or indirectly, individually or in the aggregate, 50 percent or more by one or more blocked persons are also blocked.” U.S. persons are generally prohibited from engaging in any dealings involving the property or interests in property of blocked or designated persons, unless authorized by a general or specific OFAC license, or if otherwise exempt.
Additionally, OFAC published a final rule in the Federal Register amending and reissuing the Belarus Sanctions Regulations in their entirety in order to implement the August 2021 Belarus-related Executive Order 14038 (discussed above), “Blocking Property of Additional Persons Contributing to the Situation in Belarus,” and incorporate a directive regarding sovereign debt (covered by InfoBytes here and here). The final rule (effective March 27) also updates and adds new definitions, general licenses, and interpretive guidance, among other things.
OFAC sanctions additional persons connected to Burma’s military regime
On March 24, pursuant to Executive Order 14014, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions against two individuals and six entities connected to Burma’s military regime. In announcing the sanctions, OFAC explained that the Burmese military, which overthrew the country’s democratic government in February 2021, has increased its reliance on air strikes in civilian populated areas and that the designated persons have provided assistance to military efforts through the importation, storage, and distribution of jet fuel. “Burma’s military regime continues to inflict pain and suffering on its own people,” Under Secretary of the Treasury for Terrorism and Financial Intelligence Brian E. Nelson said in the announcement. “The United States remains steadfast in its commitment to the people of Burma, and will continue to deny the military the materiel it uses to commit these atrocities.”
In conjunction with the sanctions, OFAC published an alert warning of the sanctions risks associated with providing jet fuel to the Burmese military. As a result of the sanctions, all property and interests in property belonging to the sanctioned persons that are in the U.S. or in the possession or control of U.S. persons are blocked and must be reported to OFAC. Additionally, “any entities that are owned, directly or indirectly, 50 percent or more by one or more blocked persons are also blocked.” U.S. persons are generally prohibited from engaging in any dealings involving the property or interests in property of blocked or designated persons, unless authorized by a general or specific OFAC license, or if otherwise exempt.
OFAC continues to sanction Iran’s UAV procurement network
On March 21, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions in coordination with the FBI against four entities and three individuals in Iran and Turkey accused of supporting Iran’s unmanned aerial vehicle (UAV) procurement efforts. The sanctions, taken pursuant to Executive Order (E.O.) 13382, follow the recent designation of a China-based network, as well as several prior OFAC actions targeting Iran’s UAV manufacturers and their executives (covered by InfoBytes here). According to OFAC, the procurement network operates on behalf of Iran’s Ministry of Defense and Armed Forces Logistic, which was sanctioned by OFAC in 2007 “for having engaged, or attempted to engage, in activities or transactions that have materially contributed to, or pose a risk of materially contributing to, the proliferation of weapons of mass destruction or their means of delivery.”
As a result of the sanctions, all property interests belonging to the sanctioned individuals and entities that are in the U.S. or in the possession or control of U.S. persons are blocked and must be reported to OFAC. Further, “any entities that are owned, directly or indirectly, 50 percent or more by one or more blocked persons are also blocked.” U.S. persons are generally prohibited from engaging in any dealings involving the property interests of blocked or designated persons. Persons that engage in certain transactions with the designated individuals or entities may themselves be exposed to sanctions, and “any foreign financial institution that knowingly facilitates a significant transaction or provides significant financial services for any of the individuals or entities designated today pursuant to E.O. 13382 could be subject to U.S. sanctions.”
OFAC sanctions additional persons in Bosnia and Herzegovina
On March 15, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions against three individuals in Bosnia and Herzegovina (BiH), pursuant to Executive Orders 14033 or 14059. The designations build on other sanctions measures taken in the region (covered by InfoBytes here) and “collectively underscore the United States’ willingness to hold accountable those who are undermining democratic institutions and furthering their agendas for political and personal gain, at the expense of peace, stability, and progress in the Western Balkans,” OFAC explained. Specifically, the sanctions target the director general for BiH’s Intelligence Security Agency, a BiH national who headed an agency responsible for obstructing or threatening the implementation of the Dayton Peace Agreement, and a significant Balkans narcotics trafficker.
As a result of the sanctions, all property and interests in property belonging to the sanctioned individuals subject to U.S. jurisdiction are blocked and must be reported to OFAC. Additionally, “any entities that are owned, directly or indirectly, individually or in the aggregate, 50 percent or more by one or more blocked persons are also blocked.” OFAC further noted that “transactions by U.S. persons or within (or transiting) the United States that involve any property or interests in property of designated or blocked persons are prohibited unless authorized by a general or specific license issued by OFAC, or exempt,” which “include the making of any contribution or provision of funds, goods, or services by, to, or for the benefit of any blocked person, or the receipt of any contribution or provision of funds, goods, or services from any such person.” OFAC warned financial institutions and other persons that should they engage in certain transactions or activities with the sanctioned individuals they may expose themselves to sanctions or be subject to an enforcement action.